Introduction to Penny Auctions
Since the emergence of Swoopo in 2005, Penny Auctions have popped up around the net at alarming rates. The majority of them follow the same format. A website advertises they are selling expensive products such as iPods, Macbooks, HDTVs, etc for up to 99% off retail. At first glance this may come across as just another scam. Anything that seems too good to be true must be…right? Not exactly. Under the right circumstances the Penny Auction business model successfully allows a supplier to provide high end products for very low prices.
Let’s assume a penny auction site such as IShop4Cheapis offering a 42 inch Vizio high-def television for around $27. This item retails for around $600 which means they probably purchased it from a Vendor at approximately $400. The auction starts at $1 and moves up by 1 cent with each bid. Therefore it takes 2,700 bids for this auction to reach its selling price of $27. If IShop4Cheap charges 60 cents per bid that means they earned (2,700 bids X 60 cents each) $1,620 on a TV that cost them $400. Ishop4Cheap makes a large profit and the buyer only spends $27. Well not exactly. The buyer spends $27 PLUS shipping PLUS however many bids they used on the product. So if the buyer went all in and used 300 bids to win this item he or she paid (300 bids X 60 cents each) $180 PLUS the $27 sales price PLUS shipping. Still a pretty solid deal for an item that retails at $600. Keep in mind though that many other customers placed bids on this auction and came away with nothing. Therefore a clever bidding strategy combined with a little luck is critical.
Penny auction customers use a wide variety of bidding strategies however I’ll bullet some of the more advantageous ones.
* Use Penny Auction sites with low user traffic.
1. IShop4Cheap.com – This aforementioned penny auction site is relatively new, so it hasn’t had a chance to become over-saturated with users competing for items, meaning you have a higher probability to win something. The electronics are all top notch and up to date. The site runs very smooth and has a navigational bar at the top showing where all categories/winners are. The Deal of the Week aspect is a nice touch, and I may personally add that shipping on items is blazing fast. I won two items, both of which were delivered within 3 days.
2. Beezid.com – One of the Penny Auction classics. There are literally tons of items to choose from. The layout is incredible and sometimes even overwhelming. The overabundance of users may decrease your chances of winning but do not let that take away from this penny auction juggernaut.
3. Quibids.com – With a massive marketing campaign Quibids has managed to catapult to the top of the penny auction competition rather quickly. Their Buy It Now feature is the big seller here. Once a user has reached the retail value of the product in terms of how many bids they used on it, they then have the option to Buy It Now. This prevents anyone from spending more than what the product actually costs. However, this can be frustrating for other users who just started bidding on the product as they never really had a chance to win, because that one user exercised the Buy it Now option and snatched it out from under them.
4. Bidzilla.com – Not much to say here other than this one makes the list strictly based on the fact that it is simple to win on Bidzilla. I easily won a couple items cheap. The product selection is small but who cares if you are winning the good ones.
5. BigDeal.com – BigDeal constantly updates their products so they always have some of the best items available. One of the neat features on here is that customers who placed bids and did not win the item, get a certain percentage of bids back for the next time they want to try to win that particular auction.
David is a web developer with an extensive background in Information Systems Technology. Areas of expertise include PHP, HTML, web design, server configuration, and internet marketing.